Automakers see efficiency rules costing billions in fines

Lobbyists for the Detroit Three automakers claim a proposal for stricter federal fuel economy standards would set the automakers up for billions of dollars in fines, according to a Reuters report.

The report is based on a letter from the American Automotive Policy Council, representing General Motors, Ford, and Stellantis, to the U.S. Energy Department that said the size of expected penalties for not meeting the proposed Corporate Average Fuel Economy (CAFE) standards “alarming.”

The letter reportedly claims GM would have to pay $6.5 billion in fines, Stellantis would face $3 billion, while both Ford and the Volkswagen Group would have to pay $1 billion each.

Dodge Charger Daytona Concept

Dodge Charger Daytona Concept

In addition to painting a dramatic picture about potential fines, the letter reportedly asks the Energy Department to reconsider its plan to revise the Petroleum Equivalency Factor (PEF) that governs how EVs are factored into emissions compliance, claiming the current plan would result in “disproportionately higher compliance costs” for the Detroit Three.

The Detroit automakers face compliance costs of $2,151 per vehicle, compared with $546 per vehicle on average sold by other automakers, the letter reportedly said, claiming this policy “would reward those auto manufacturers resisting the transition to a fully electric future the most.”

Reversing the previous administration’s efforts to erode emissions standards, the Biden administration began the process of instituting tougher standards in April, when the EPA issued proposed tailpipe emissions rules for model years 2027 to 2032. EVs are not mandated under this proposal, but the EPA anticipates it would lead to 67% EV sales by 2032.

2023 GMC Hummer EV Pickup

2023 GMC Hummer EV Pickup

The EPA’s proposal was followed in July by the new CAFE targets now being opposed by the automakers, issued by the NHTSA. As several groups including the American Council for an Energy-Efficient Economy (ACEEE) have noted, neither proposal incentivizes EV efficiency. Eliminating tailpipe emissions from internal-combustion vehicles would be a big step, but a focus on efficiency will also be needed in a future when the majority of new cars sold are EVs.

GM and Stellantis paid record fuel economy fines earlier this year for fleet efficiency, but that was dating back to 2018 and 2019. At a combined $363 million, the total was much less than what the automakers believe they will pay under the proposed new standards. Meanwhile, GM EV production lags and targets look out of sight.

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